Is social security bankrupt?
No.
No matter how many times conservatives repeat this, it’s simply not true. The social security trust fund has about $2.6 trillion in assets. Those assets are comprised of long term, interest-bearing U.S. bonds.
Without some changes, the social security trust fund will eventually run out due to demographic shifts. Until 2010, the money paid into the fund exceeded the money paid out every year since 1983. If we only consider the retirement portion of Social Security (which is what most people think of when they say “social security”), its income (including interest) will exceed outgoes until 2025. The current exhaustion date is 2038. At that point, benefits would be reduced to something like 75% of what it was. This is if we make no change whatsoever.
If we make a few minor changes, the solvency of the fund can easily be extended indefinitely. The deficit commission, for example, proposed raising the cap on payroll taxes and gradually increasing the retirement age by two years by 2075. Another possible change is changing from one way to calculate cost of living increases to another.
So yes. Some changes in social security will eventually be necessary. Things will be a lot easier if we do them sooner rather than later. But the idea that social security is failing on some systemic level is simply false. If you’re hiking on a long, straight trail, you aren’t about to fall off a cliff if the cliff is 26 miles away and all you need to do is change course, slightly, somewhere in the next 26 miles to avoid it.
Some of the conservatives will also claim that the bonds in the trust fund aren’t actually valuable or that it is essentially a pyramid scheme. The money is invested in U.S. bonds—which are backed by the full faith and credit of the U.S. government—sort of like cash. This is about as conservative an investment plan as you can get. While the money that was used to purchase the bonds has, of course, been spent, the bonds are quite real and the fund is quite solvent.
